Speedway Converts More Than Half of Acquired Hess Sites
FINDLAY, Ohio — Marathon Petroleum Corp. (MPC) has converted more than half of the convenience stores in the East Coast and Southeast it acquired last year from Hess Corp. to the Speedway brand, stated MPC President and CEO, Gary R. Heminger, during its 2015 fiscal second-quarter earnings conference call Thursday.
Since the merger, more than 650 c-stores have been converted to the Speedway brand, he said, adding that these stores have performed well.
"We continue to make great strides, with more than half of the total retail sites converted to the Speedway brand since the acquisition last September," Heminger said. "We are on pace to achieve the expected synergies for 2015 from light product supply, as well as from operating and administrative expense savings. Further, the accelerated progress for store conversions and subsequent remodels has allowed us to more rapidly implement Speedway's industry-leading Speedy Rewards loyalty program. This program and other marketing enhancements are expected to drive the anticipated synergies to the business over the next several years."
Speedway LLC CEO, Tony Kenney, added conversions are moving along at an “accelerated pace.”
When questioned by a Wall Street analyst, Heminger agreed that another major c-store acquisition is not likely in the near future, as MPC continues to integrate the Hess retail purchase.
SPEEDWAY EARNINGS HIGHER
Overall, Speedway earned a net profit of $127 million in its second quarter ended June 30, compared to $94 million during the same period in 2014.
Higher merchandise sales and margins were the main reason for the c-store retailer’s earnings increase. The new stores acquired from Hess, which contributed $14 million in net earnings, also provided a nice boost.
Merchandise sales improved by $434 million to $1.264 billion, while merchandise gross margins rocketed higher by $134 million to $359 million.
Merchandise gross margin percentage rose 1.4 percentage points to 28.5 percent, and same-store merchandise sales rose 4.6 percent year over year.
Gasoline and distillate sales increased 708 million gallons to 1.514 billion gallons, while gasoline and distillate gross margin rose 0.69 cents per gallon to 13.51 cents per gallon. The only negative on the Speedway ledger was same-store gasoline sales volume, which declined by 0.2 percent year over year.
Speedway operated 2,755 convenience stores as of June 30.
MPC EARNINGS FALL
Companywide, Findlay-based MPC’s earnings dropped $36 million year over year to $855 million in its fiscal second quarter.
"Second quarter results reflect a solid performance across our operating platform," said MPC President and Chief Executive Officer Gary R. Heminger. "Refining performance was notable, as our refineries benefited from the combination of high utilization and favorable market conditions."